Vodafone’s run of ‘unfortunate events’ might be coming to an end, analysts at Deutsche Bank believe and that makes it a buy.
Some of the misfortune was unavoidable according to the German bank, Covid, energy costs, and a higher US dollar, but some was self-inflicted such as German sluggishness and no consolidation progress.
Nick Read, chief executive, has paid with his job with no successor in sight and a range of outcomes that Deutsche Bank suggests stretches at one extreme to a break-up to continuity at the other.
While some investors might prefer a break-up, continuity is far from unappealing adds the bank.
“The current team is on the cusp of monetising towers at highly attractive valuations, deleveraging materially and cutting costs to offset an energy headwind which is rapidly reversing, whilst investing heavily and raising prices.
Further, the recent transfer of Egypt to Vodacom increases emerging markets (EM) value transparency and preps for a spin or sale.
“In the meantime, the prospect for improving organic growth in fiscal 2024 provides a brighter outlook.
“VOD yields 8.7% (€9 cents) annually but given the energy price reversal and disposals we see little rationale for a dividend cut though one is more than discounted."
Buy rating with a lowered target price of 195p (previously 215p) is Deutsche Bank’s view.
Shares were flat at 91.8p.